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Petal, the New York-based startup behind the Petal Visa credit card, has tweaked its original product after more than two years on the market, while also sprouting a brand-new blossom.
The Petal portfolio now includes two cards:
Both cards aim to facilitate a path to credit for those with no credit history or a less-than-ideal credit file. Petal's pre-qualification process will alert applicants to the better option of the two (if they're eligible). As before, Petal's issuing bank — Utah-based WebBank — will still be able to consider more than just traditional FICO scores when evaluating applicants’ creditworthiness, thanks to a proprietary underwriting model that can also take into account things like income, expenses, savings and debts.
But whereas Petal originally focused on those new to credit, these changes allow the company to target a larger audience — those who may have a credit history but want to continue growing it.
“New-to-credit consumers are only one subset of the larger underserved population in the United States,” says co-founder and CEO Jason Gross. “We’ve always known that using cash flow underwriting, or 'cash scoring' (as we now refer to it), has the potential to help a much wider audience.”
The Petal 1 makes its debut
The Petal 1 is an entirely new card made for people who don't have a strong enough cash flow or credit history to qualify for the Petal 2. It features:
No annual fee or security deposit.
Between 2% and 10% cash back when you use the card to shop with hundreds of select merchants. (This will include local businesses as well as national retailers like Old Navy and Lowe's.)
A credit limit of $500 to $5,000, depending on your creditworthiness. (The lower limit was changed in November 2021 to $300.)
The ongoing APR is 22.24%-31.74% Variable APR.
No foreign transaction fees.
Unlike Petal's original product (see below), the Petal 1 will charge late fees and returned payment fees if you incur them, and its APR range is generally higher. But you won't owe the kind of pesky or sneaky charges that tend to come with other unsecured credit cards for bad credit, such as annual fees, activation fees, monthly maintenance fees, etc.
The original Petal Visa gets a refresh
The original Petal Visa is now called the Petal® 2 "Cash Back, No Fees" Visa® Credit Card. It is best suited for those with good credit or strong cash flow (income, savings and on-time payment history) that can be demonstrated with banking data. The card will maintain most of its features: no fees, up to 1.5% cash back on purchases and a potential credit limit of $500 to $10,000 for those who qualify. (The lower limit was changed in November 2021 to $300.)
But new and current cardholders can expect the following changes:
A different design to go with its new name: For new cardholders, the card will no longer be white with a cluster of colorful circles in the center. Instead it'll be a light-yellow color with a white stripe that runs across the bottom of the card.
A lower APR: Prior to the rebranding, the card charged an APR as high as 29.49%, but that has changed. The ongoing APR is 15.24%-29.24% Variable APR.
Bonus cash back: The card continues to offer up to 1.5% back once you meet a certain number of on-time monthly payments. But on top of that, when you shop with select merchants, you can earn between 2% and 10% cash back.
Both cards offer access to a number of features in the Petal mobile app to help you manage your account responsibly, including things like subscription management options, budgeting features and automated payment tools.
Which card can you expect to get?
Petal's issuing bank will use that alternative "cash scoring" process, which Gross spoke of, in the same way as before to evaluate income, savings and spending history. You’ll have to link a bank account to provide this information as part of the application process.
WebBank considers that information and your FICO credit score (if you have one) to determine eligibility for either card. If you're initially approved for the Petal 1, you might eventually be able to upgrade to the Petal® 2 "Cash Back, No Fees" Visa® Credit Card, according to the company.
In a time when traditional credit card issuers are tightening their lending standards amid the COVID-19 crisis, Gross claims that Petal's technology continues making credit accessible. The company can see when someone goes back to work, when they receive unemployment income, when they receive stimulus payments and other factors as part of its evaluation.